EchoStar, DirecTV merger now on life support

Rejecting last week’s effort to save the proposed EchoStar-DirecTV merger, the U.S. Justice Department and 23 state attorney generals have filed a lawsuit to block the proposed $26 billion deal.

The court action now leaves the possibility of any EchoStar-DirecTV alliance all but dead.

Last week, EchoStar offered to transfer dozens of communications frequencies and three satellites to Cablevision, who would, in turn, start a satellite business next year in an attempt to create new competition in the direct-to-home satellite marketplace.

The Justice Department rejected the idea, contending Cablevision would not offer significant enough competition. Both the Justice Department and FCC were against combining the nation's two largest providers of satellite TV service into a single entity because the pairing would reduce competition and result in higher service costs to consumers.

Although most companies abandon proposed mergers once the Justice Department announces its opposition, both EchoStar and DirecTV expressed disappointment over the legal action but stopped short of saying whether they will continue to pursue the proposed merger.